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Preventing audit failures, rethinking audit inspections, and using new technology are among the areas that the regulator for the U.S. audit industry is looking into as its advances with a new agenda set for release this summer.
The Public Company Accounting Oversight Board met June 4 for the first time with its standing advisory group since the board’s entire membership was replaced in December.
The meeting gave investors, preparers, and auditors a chance to hear directly from the board and to ask about their plans for the audit overseer. The PCAOB—one of three regulators that sets the ground rules for public companies operating in the U.S.—is re-examining its priorities.
Board members also said they are focused on better communication and increasing transparency. They want to focus on serving investors and to build more formal relationships with audit committees.
Board Chair William Duhnke said that they continue working on an update to the board’ strategic plan. Board members have spoken with staff and stakeholders about what works and what doesn’t work with its standard-setting, inspections, and enforcement programs.
Duhnke said he hopes to release the draft plan for public comment in July or August.
“The only sacred cow is our mission,” Duhnke said as the board reconsiders how it regulates audit quality.
The 2002 Sarbanes-Oxley Act created the PCAOB to restore public confidence in auditing after the accounting scandals that led to the collapse of Enron Corp. and Worldcom Inc. The statute requires the board to protect investors through accurate audits.
The more investors are involved in the PCAOB’s work, and support the steps the board takes to improve audit quality, “our role will be called into question less,” said member Jay Brown.
The PCAOB has faced pushback over past projects that required audit team leaders names to be included on audit reports and for taking years to update the standards for what is required in an audit report.
Advisory group member Joan Amble told Bloomberg Tax that scrutinizing and building on the work of the 15-year-old regulator is healthy. But she’s heard from previous boards similar messages of transparency and better communication with stakeholders.
“How they do it is what needs to change,” Amble said.
She believes the current board members understands that the inspection process can be improved. She hopes they will make changes and set achievable goals.
“They need to get some quick hits to get everybody on board,” Amble said.
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